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November 19, 2008

Standard setter firm on due process

The International Accounting Standards Board (IASB) will not make further changes to IFRS without completing proper due process, according to board member John Hill.

Political pressure recently forced the IASB to make rapid changes to IAS 39 and IFRS 7 without completing due process.

However, Hill said following the amendments, the board has heard “loud and clear” from stakeholders, including financial statement preparers, users, analysts and auditors that any future changes must be made with proper due process and in co-ordination with the US Financial Accounting Standards Board (FASB).

A prominent group of UK profession leaders recently warned that it is important the IASB remain independent from political interference and due process is followed.

Hill was speaking as chair of a joint IASB and FASB round table held in London this month to help identify financial reporting issues highlighted by the global financial crisis. Similar round tables will be held in the US and Japan.

His comments follow requests from the EC that the IASB considers rushing through further changes to IAS 39 in time for European banks to prepare their end of year financial statements.

Following the London roundtable, Hill told the International Accounting Bulletin that the board will not know whether it will make changes to IFRS in time for the year-end until after the final round table has been held in Japan on 3 December.

If it is decided urgent changes are needed, due process will still be followed.

He added that the IASB is “very fortunate” that FASB has disrupted its own schedule to participate in the round tables to ensure any changes are made in unison by the two boards.

More than 60 people participated in the London round table, which ran over two sessions. Auditors, preparers, investors, analysts, standard-setters and regulators were all represented and came from as far as Australia and South Africa.

Key issues discussed included the triggers and accounting issues related to impairment, and how and when to use fair value measurement in an inactive market.

Carolyn Canham

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